/FreshBooks

FreshBooks

FreshBooks started its life as an invoicing solution. Over the years, its growth in many areas has made it the go-to online accounting service for sole proprietors and startups. Its popularity extends to small to midsize businesses (SMBs) in many cases. It is our Editors’ Choice pick in the freelancer category. The tool went through a major update a few years ago, but some functionality has been slow to migrate from FreshBooks “Classic” (users signing up for the service are required to use the new version). Even without these tools, FreshBooks is the best choice for the smallest businesses because of its exceptional usability and aesthetic properties—and its smart selection of features.

FreshBooks is available for as little as $15 per month for the Lite plan, which lets you bill up to five clients. For $25 per month, the Plus plan lets you bill 50 clients, and for $50 per month, you can bill as many as 500 clients with the Premium plan (some customers have been asking for a tier between Plus and Premium to be able to bill between 50 and 500 clients). Custom pricing is available above that level. Besides the numbers of clients served, all of the plans offer the same features, and you can enjoy a 30-day free trial at any tier, too. FreshBooks is expensive when compared to the free Wave, but its usability and tightly-focused features make it worth the cost.

Old FreshBooks and New

Beyond the ongoing tweaking and adding of new features that FreshBooks has done since I last reviewed it, the tool has undergone one very significant change: It now adheres to the rules of double-entry accounting, the industry-standard bookkeeping method that accountants and other small business accounting websites use.

How will this change affect the way you use FreshBooks? For the most part, it won’t. You’ll still engage in activities like creating invoices, tracking time, and receiving payments the way you always have. But your accounting records have a new, solid framework that provides more structured recordkeeping and improved insight into your finances. Specifically, FreshBooks now has a Chart of Accounts and General Ledger; two new accounts, Other Income and Cost of Goods Sold (COGS); bank reconciliation; and two additional standard financial reports (Trial Balance and Balance Sheet).

FreshBooks still hasn’t incorporated some of the tools found in FreshBooks Classic (the previous version that was replaced over two years ago with the current version). Inventory management and voluminous reports are two of the features available in FreshBooks Classic that aren’t in the new FreshBooks. At least some of these features are expected to migrate over in the future. Current FreshBooks subscribers can choose to continue using FreshBooks Classic or move to the new version, but anyone signing up now automatically gets access to the revamped service.

FreshBooks - Time Tracking

An Effective UI

FreshBooks’ setup tools are simple. The tool prompts you to provide details about your company; customize your invoices (options are limited to two templates, logo, background color, and two fonts); and send a test invoice.

The first screen you see after setup is the tool’s Dashboard, which gives you a quick overview of your company’s financial status. There are five charts. Outstanding Revenue tells you who owes you money and who is behind on payments. Total Profit, of course, gives you a real-time number for your current profit or loss; you can change the date range for this graphic. Spending displays your expenses by category. There are two new ones here: Revenue Streams and Unbilled Time.

The top of the screen now features training videos; links to support and what’s new in the tool appear in the lower right. Links in the upper right take you to pages where you can invite team members (including an accountant) at various permission levels and create new records and transactions. Unfortunately, you have to scroll a lot to see the charts, which aren’t interactive, and there’s no to-do list, like in GoDaddy Bookkeeping.

A vertical pane to the left of the dashboard displays navigation links to the core areas of the tool: Dashboard, Clients, Invoices, Expenses, Estimates, Time Tracking, Projects, My Team, Reports, and Accounting Click the link above this list, next to your company name, and a list of tool’s settings opens. Here you can, for example, add additional businesses, contact support, create item and service records, and integrate third-party apps.

You can also set up two connections that are critical to FreshBooks operations. If you enter your login credentials for financial institutions at which you have accounts, then FreshBooks connects to their websites and imports your account transactions. And by signing up for FreshBooks Payments or Stripe, you can start accepting credit cards. Finally, the small bell icon in the upper left takes you to updates about your clients, team members, and other business issues..

Overall, FreshBooks has the simplest, most intuitive and attractive screen displays of all the tools I’ve reviewed recently. It’s easier to read at glance than Kashoo, for example. It can, however, take a while for a user of the old FreshBooks interface to get oriented.

FreshBooks - Roberta Hart

Creating Invoices

Click the Invoices tab in the toolbar, and the screen that opens tells you everything you need to know about your accounts receivable (though the tool doesn’t use that accounting term) status. With the “from me” tab highlighted (“to me” opens a page for invoices you’ve received from other FreshBooks users), you’ll see dollar totals for invoices that are overdue, outstanding, and in the draft stage. Below that are graphical links representing your most recently updated invoices. A list of all invoices appears at the bottom. New videos at the top of the screen walk you through common procedures.

FreshBooks supports two additional types of transactions: estimates and proposals, both of which can be converted to invoices. A proposal is much more detailed version of an estimate that can be signed by the client on acceptance (FreshBooks allows these electronic signatures). It can include narrative text and tables and can span several pages. No competing tools offer such an advanced option. New since I last reviewed FreshBooks is the ability to create retainers, which you can use when you’re setting up an ongoing business relationship with a client who may require more complex invoicing.

To get started here, you click New Invoice. An invoice template opens with your contact information and logo, the current date and due date, and an invoice number filled in. You do the rest by selecting items or services and entering the quantities. If you’ve created sales tax rates already, then the correct one should be assigned. You can add a discount, which many tool allow. But you can also request a deposit and set up a payment schedule, both of which are unique to FreshBooks. Once it’s completed, you can save or send it.

One caveat here: fees for FreshBooks are based on the number of clients you designate as active. If you add a new client during the invoicing process and you previously had five active clients (which is the upper limit of the initial pricing tier), you will eventually find yourself being billed at a higher cost.

FreshBooks - Reports

Related Tools

Your customers can make payments to you by using FreshBooks’ own payment function (which is actually rebranded from payment processing service WePay); it costs 2.9 percent plus 30 cents per transaction, which is effectively the industry standard.

You can set up sales taxes right from your invoices, too. There’s an Add Taxes link directly below each item’s Rate; click on it, and a small window opens where you’ll be able to define multiple sales taxes. You can either check a box to apply those taxes to all line items on the invoice or assign them individually. FreshBooks does not directly integrate with a sales tax service like gold standard Avalara, but even without this, it handles sales taxes like most competitors do. The Sales Tax Summary report will help you fill out any necessary related reports.

Context-Sensitive Settings

As you’re working on invoices, FreshBooks displays links to context-sensitive settings. This is unique to FreshBooks. Other tools have one giant section of the tool in which you define all of its settings. This context-sensitivity is great feature, one that saves time and constantly reminds you of options available. You can, for example, switch to a different invoice style here. You can also make the invoice recur at specified intervals, either automatically or manually, and set up online payments.

If you’re using any version of FreshBooks except for Lite, you can have reminders sent at designated intervals and charge late fees, which is unusual in this group of tools. Once you’ve saved an invoice, you can open it again and edit it, or click the More Actions button for additional tasks, such as emailing the file, applying a payment, or creating a PDF file. You can also view the invoice’s history.

FreshBooks - New Invoice

Contacts and Expenses

FreshBooks’ client records display their contact information within graphical representations of business cards; they contain fields for each client’s name, mailing and email addresses, and phone numbers. A chart next to the client card shows how much outstanding revenue is associated with that client, and breaks it down into draft invoices, unbilled time, and unbilled expenses. Below that is a table that displays lists of invoices, retainers, expenses, estimates, time-tracking, projects, and reports for that client. You can toggle between them by clicking tabs. Client records have improved since the last time I reviewed FreshBooks.

If you’ve connected one or more bank accounts to FreshBooks, you see a list of recent transactions when you click the Expenses tab. FreshBooks tries to automatically categorize these (with choices like Professional Services, Supplies, Meals & Entertainment, Personal, and so on) when it brings them in, but it doesn’t always hit the mark. You have to train it at first by correcting inaccurate categories, which you definitely should, as this information is very important for use in reports and taxes.

Whether you’re entering an expense manually or editing one you’ve imported, you can add or modify a lot of detail. The five most recently updated expenses appear at the top of the Expenses screen; they look like strips of cash register tape. Individual expense records in the list below contain fields for the date, suppliers, categories, descriptions, prices, and taxes. You can attach a file or drag and drop a receipt image, mark the expense as billable to a specific client, change the currency, and designate it as Cost of Goods Sold (COGS). No competitor in this group offers such comprehensive expense records. But FreshBooks doesn’t estimate quarterly income tax payments, like Intuit QuickBooks Self-Employed does.

FreshBooks - Edit Expense

Simple Project Management Tools

FreshBooks offers richer project management functionality than its competitors in this category. To get started, you’ll give your project a name and assign team members to it as admins, managers, employees, or contractors (each role has its own access restrictions). You’ll assign it to an external client if you’re doing the project for someone else, so they can collaborate and be billed, and enter an hourly budget and end date. You have two billing options: hourly or flat project rate. If you select hourly, you can choose from among a single hourly rate or rates by team member or service.

To specify the services that will be included in the project, you click the Add Service button and type a descriptive name. FreshBooks then creates a list of all the services you’ve added and displays them when you create a new project. You click the X in the corners of the ones you won’t be using for that project.

When it’s time to start adding time entries for your project, you’ll have two options: start and stop a timer, or enter the hours manually by filling out the fields in a small window (adding the time to a retainer is one option here). The Time Tracking page lists all entries and shows hours worked by contributors in the timeline. This data can also be viewed as a bar chart.

You can’t specify a project on an invoice, but you can, of course, bill clients for the hours worked and expenses incurred. When you select a client in an invoice that has either of those items, you’ll see them in the list of items that drop down. You click Add to include it on the invoice, and the option to identify these as specific project hours appear there. Both Time Entries and Projects can be automatically converted to invoices.

FreshBooks’ Mobile Apps

FreshBooks offers excellent Android apps and iOS mobile apps that are largely similar to each other. Like the browser-based version, the apps are intuitive and attractive. In both cases, the FreshBooks app opens to a dashboard that contains three critical charts, Outstanding Revenue, Total Profit, and Total Spending. Icons at the bottom of the screen take you to the working areas of the tool, where you can view, add, and edit data contained in invoices, expenses, time tracking, estimates, and client records.

Reclaiming the Prize

If you’ve never used FreshBooks before, you shouldn’t have much trouble learning how the current version works FreshBooks’ design is exceptional and its navigation tools intuitive. We recommend you check with the company before switching from FreshBooks Classic, though, to make sure your must-have features are there.

Freelancers hoping to capably manage their money need the best invoicing and time-tracking tools, expense-management and client records, and reporting available. They need to get in and out of the tool quickly to do their work, and it doesn’t hurt if the tool’s user interface and navigation tools are also best in class. FreshBooks offers all that and more to win this years’ Editors’ Choice again.

While FreshBooks is an exceptional choice for freelancers and independent contractors, it lacks a lot of functionality that larger, more complex businesses need. Intuit QuickBooks Online wins our Editor’s Choice for small business online accounting.

Original Source